Dell gives away megahertz in laptop war

Dell Computer has given away free memory, hard-drive capacity and optical drive upgrades to entice customers. Now some buyers are getting free megahertz.

The Austin, Texas-based computer giant is not charging for most processor upgrades on its Latitude notebooks, which are geared toward businesses. A Latitude C840 with a 1.7GHz Pentium 4 processor and 256MB of memory, for instance, costs $2,297--but a similarly configured C840 with a 1.8GHz Pentium 4 or a 2GHz Pentium 4 can be had for the same price.

The same holds true for C640 models, which are thinner but have less memory and hard drive capacity than machines in the C840 line. Putting in a 2.2GHz processor adds $100, the same as on a C840. But the prices on 1.7GHz to 2GHz notebooks are identical on similarly configured C640 Latitudes.

The C840 and C640 are Dell's primary notebooks for business customers.

The megahertz giveaway, which appears to be a first for Dell, comes as a result of a brewing price war with Hewlett-Packard in the commercial notebook segment.

"HP has decided to make the commercial notebook group unprofitable for Dell," said Matt Sargent, an analyst at research firm ARS. "Dell has never really been challenged by these guys."

The price war began to heat up over the summer, in the wake of the HP-Compaq Computer merger, said Sargent. In the past, Compaq would cut prices on commercial notebooks every couple of months. HP would space cuts out even further. The situation let Dell, with its build-to-order manufacturing method, undercut the companies.

Recently, though, HP has become aggressive, and it cut prices on some of its Evo notebooks for businesses three times in three months, Sargent said. HP could not be reached for comment.

A Dell representative said the company is using the complimentary processor upgrade to entice customers, adding that the deal has gone on for a few weeks.

"In this case, it is to help the customers who buy in volume," the representative said. The representative was not aware of any time in the past when Dell charged the same price for machines with different processors.

Dell's own pricing seems to strongly indicate that these discounts come in response to increased competition in the market for corporate notebooks. In the Inspiron line for consumers, Dell still charges for megahertz. Upgrading an Inspiron 8200 from a 1.7GHz Pentium 4 to a 1.8GHz costs $50. Upgrading to a 2.0GHz costs $150, while going up to 2.2GHz adds $550.

Other upgrades on the Latitude line also come at a price. Moving from a 15-inch UXGA display to an SXGA display, for example, costs $100.